Trend Indicators

CFED Assets & Opportunity Scorecard

Student Loan Default Rate

Definition

Percentage of student loan borrowers entering repayment on certain Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan Program loans that defaulted within three years, FY 2009-2011.

Description

Student loans are typically considered “good debt” because individuals with college degrees tend to have greater lifetime earnings than those without college degrees. Defaulting on student loans damages borrowers’ credit, however. A high student loan default rate is an indicator that recent graduates have unsustainable debt burdens or are unable to secure jobs that pay a sufficient wage to cover debt payments.